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Ring fencing of assessed loss

Posted 18 February 2016 under Tax Q&A


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Piet says:
15 February 2016 at 11:59

I sold a property during the 2015 year of assessment and made a significant capital gain. I also claimed an assessed loss deduction on the same property for rental losses (finance charges, levies etc) against my other income up to the date the property was sold. SARS ring fenced this loss as my total taxable income falls in the highest tax bracket. However this is only as a result of the significant capital gain I made on the same property I claimed the loss on. Is there a provision in the act that allows me to exclude the capital gain for purposes of determining whether I fall in the highest tax bracket?

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TaxTim TaxTim says:
16 February 2016 at 12:38

Unfortunately not - one third of your capital gain is added to your taxable income and your total income is then taxed according to the tax tables.

Has the assessed loss from the property been used to reduce the capital gain?

Piet says:
16 February 2016 at 14:07

Thanks for the reply.

No I did not deduct the assessed loss from the capital gain. Is this allowed?

TaxTim TaxTim says:
18 February 2016 at 19:10

No it is actually not. The capital gain can only be reduced by capital losses.


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